Industry promises 60% increase in power prices will end outages

VietNamNet Bridge – Vietnam’s power sector has asked the Government to approve an increase in average electricity prices from 5.5 US cents per kilowatt hour (kWh) to 8 cents. Energy Association Chairman Tran Viet Ngai explained why such a big increase is necessary to the HCM City newspaper, Tuoi Tre.

“We’ve proposed that the electricity price be raised to eight cents per kWh,” Ngai said, “about 1500 dong, an average increase of about 400 dong. It’s not so high. We need to recognize that for over a decade, not a single foreign company has been willing to invest in Vietnam’s energy sector, because our present electricity tariffs are too low to make an investment profitable.

“Vietnamese industrial groups like Electricity of Vietnam, PetroVietnam, the mining group Vinacomin and the engineering and construction group Song Da are earning very little on their investments in the power sector. That’s why they don’t have the capital to push such projects. If we don’t raise the price consumers pay for electricity, we’ll still have serious power shortages decades in the future.

“Not having enough electricity will hurt our national economy much worse than increasing the price of power by a few hundred dong to ensure that we’ll be able to finance the additions to supply that we must have. We’ve surveyed foreign companies, and they’ve confirmed that if they can sell electricity for eight cents per kilowatt hour, they’ll invest in Vietnam’s power sector.

“Our own industrial groups agree that they too can mobilize capital for new power plants if the electricity price is seven or eight cents per kilowatt hour. At that price, they can expect to earn four or five percent per year on capital invested in such projects.”

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